Michelle Rodger: The appetite for start-ups is out there – we just need to get cooking

THERE is a growing sense of frustration amongst the entrepreneurial community about the perceived lack of appetite for start-ups in Scotland.

Just last week a report from the clearing banks said the number of start-ups in Scotland fell by almost 12 per cent in the third quarter of 2011. The number of new business start-ups in the three months to the end of September fell from 3,986 in the second quarter to 3,521.

This figure is well below the 4,038 start-ups recorded in the third quarter of 2010, and suggests a falling trend since the start of the year.

The figures, as they are presented, are disappointing and they contrast starkly with other statistics that show an 18 per cent increase in start-ups year-on-year across the whole of the UK in 2011.

Yet that is not actually the whole story: the report didn’t make as much noise about the net increases in education, recreational, personal and community services and health and social work as it did about the negative numbers. Instead it, and most newspaper coverage about the report, focused on Scottish entrepreneurs shying away from the risk of starting a business.

So how accurate are these figures? The Scottish clearing banks are the big four – Royal Bank of Scotland, Clydesdale Bank, Lloyds TSB and Bank of Scotland – and don’t include major banks such as Santander and HSBC. And the figures don’t include people who are starting up and not opening business bank accounts.

So why is the survey carried out? Simply to paint a picture of the start-up scene, or to influence activity aimed at fostering and facilitating more entrepreneurial activity?

It doesn’t reflect my experience, and it doesn’t reflect that of many business owners in Scotland. It also doesn’t sit with a different report published last week about the resilience of the Scottish economy compared with the rest of the UK.

According to the latest purchasing managers’ index (PMI), produced by Bank of Scotland, Scottish firms continued to grow in November and were actually creating jobs for the first time in four months. This, said the report, demonstrated their “resilience” compared with the rest of Britain.

The report went on to highlight “mild expansion” of activity in the Scottish private sector last month. Recent data from Business Gateway actually suggests an increase in the number of start-ups.

So here’s what I want to know: are we asking the right questions of the right people to provide accurate data? And what should we be doing with this data?

If an employee brought me a set of disappointing figures, I’d be looking for him to bring me a solution at the same time. Yet there is no solution being offered here, just a snapshot of a limited set of data.

What good are statistics that lie dormant, serving only to judge a snapshot in time, with no lasting legacy?

Capturing the number of start-ups is notoriously difficult. Some data captures only VAT-registered businesses, some limited companies and so on.

Iain Scott, a former academic turned entrepreneur turned coach, says there is a huge interest in Scotland in starting a business, not always because people want to but because they have to.

He adds: “But what has happened is that there has been a massive growth in the reporting and talking about entrepreneurship, in the same way as we have lots of food programmes and celebrity chefs but not enough people cooking food.”

To continue the food analogy, it’s not about counting how many pies we haven’t yet baked. Instead it’s about making the most of the ingredients we have, perfecting the recipe and baking more.